Tuesday, January 22, 2013

The under Rs 25 lakh luxury car segment is creating a sensation among the luxury car makers. But one more thing that the car makers have realized is that it is the Indianised versions of their cars that work best here rather than completely built up units that are imported as is. Sensing these factors as determining for their success in India, luxury car giants in the country – BMW, Audi and Mercedes Benz have laid down an aggressive strategy to launch cars that are assembly locally and have a reduced price. Where BMW plans to assemble BMW 1 Series in India, Audi will be assembling the Audi Q3 SUV here in India soon.

As the localization content in these luxury cars could not be increased to an extent the budget segment cars have, a miraculous drop in price of these cars is not expected. But whatever is the price concession it will be highly welcomed by the car buyers and it will give an edge to the car makers in increasing their volumes in the country. As per the industry reflections, the car makers were able to increase their presence and hold over the segment due to better pricing and local production that also helped them provide instant delivery.

The gap between the duties on parts or the completely knocked down units and completely built up units is large. If a company imports parts and assembles them in the country, it attracts only 10 percent duty while if the entire unit is imported as is it attracts an import duty to the tune of 75 percent. Thus producing cars in India proves to be economical and beneficial for car makers and this way the car makers are able to offer better pricing of their cars. Thus the cars become more affordable and so these sell well in comparison to those models which are imported as completely built up units.